Tag Archives: Peter Hannaford

In his Oval Office address last night, President Obama explained that he would meet today with the chairman of BP at the White House. The president said he would “inform him that he is to set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company’s recklessness.”It was an interesting choice of words. Obama didn’t intend to “ask,” he would “inform.” The president wasn’t planning to offer a request; he would offer instructions.

The follow-up question was obvious: what if BP simply refused? Fortunately, it appears Obama was persuasive — just a few hours after sitting down in the Roosevelt Room, a deal came together.

The White House and BP tentatively agreed on Wednesday that the oil giant would create a $20 billion fund to pay claims for the worst oil spill in American history. The fund will be independently run by Kenneth Feinberg, the mediator who oversaw the 9/11 victims compensation fund, according to two people familiar with the deliberations.

The agreement was not final and was still being negotiated when President Obama and his top advisers met Wednesday morning with BP’s top executives and lawyers. The preliminary terms would give BP several years to deposit the full amount into the fund so it could better manage cash flow, maintain its financial viability and not scare off investors.

Note the fund is to be established over two years, through a combination of dividend cuts and reduction in spending. Moreover, a planned dividend payment for June 21 is being halted, which would appear to be a meaningful concession. From Bloomberg:

Svanberg and Chief Executive Officer Tony Hayward agreed to set aside $20 billion over several years to compensate victims of the spill after Obama in an Oval Office address yesterday called for creation of a fund. BP said it will reduce capital expenditure and sell more assets than planned to free up cash.

“The dividend is off the table,” said Alastair Syme, an oil and gas analyst at Nomura Holdings Inc. in London, before the announcement. “Until they have some clarity on the costs of the spill, they can’t do anything.”

BP’s payments accounted for about 14 percent of all dividends in the U.K.’s benchmark FTSE 100 stock index last year. Fitch Ratings yesterday lowered BP’s credit score by six grades to BBB, two levels above junk, on concern costs will escalate.

President Obama deemed the meeting to be “constructive” and stressed that the $20 billion set-asde was not a maximum payout and that BP would be responsible for all costs, including environmental damage. (Hhm, what might the loss of the brown pelican, if it comes to that, be worth?)

The fund will be “independently” administered by Kenneth Feinberg, who was in charge of overseeing executive compensation for the TARP (aside: he has gotten himself in the midst of particularly politicized and thankless tasks. He also administered the process of compensating 9/11 victims). The administration of the fund had been a bone of contention.

The Wall Street Journal reports that BP “voluntarily” agreed to set aside an additional $100 million to compensate Gulf workers idled by the moratorium on deep sea drilling.

The Exxon Valdez disaster, America’s worst environmental catastrophe before Deepwater Horizon, illustrates some of the complications in paying economic damage claims. After 11 million gallons of oil spilled into Alaska’s Prince William Sound in 1989, locals filed damage claims with the Trans-Alaska Pipeline Liability Fund, which had been established when the pipeline was authorized in 1973. Oil companies operating in the area deposited money in the fund as a form of insurance — a precursor to the Oil Spill Liability Trust Fund, created by the Oil Pollution Act of 1990 (itself prompted by the shock at the Exxon Valdez spill). The fund was authorized to distribute up to $100 million in damages, though according to John. J Gibbons, who administered it, only a fraction of this sum was handed out.

“Whatever they put in place in the Gulf will have to take into account a lot of complexities with respect to the claims process,” Gibbons says.

“For example, an enormous number of vessel owners and crew members who were in the fishing business have been more or less laid up. On the other hand, as the clean-up progresses, those vessels of necessity are going to be hired to participate in the clean-up work — and they’ll get paid,” Gibbons says. “Any claims process with respect to lost fishing income has to take into account that some of them will be making more money cleaning up than they would have made fishing.”

Brian O’Neill, who represented Alaskans who lost income due to the Exxon Valdez spill in their 21-year battle with the courts, also fears the escrow fund could get bogged down in the process of divvying up $20 billion.

Processing a fisherman, hotel owner, or restaurateur’s claim, O’Neill explains, has two phases: “The first thing is, he needs money now or he’s going to go bankrupt, so there’s an interim payment. But secondly, you also need to make a determination of how much business he’s going to lose over time.”

O’Neill cites an example from Exxon Valdez: salmon fishermen took a hit for one to three years but eventually managed to recover some business. Herring fishermen, on the other hand, could never fish again, but they didn’t know this until five or six years later, when the scope of damage to local herring populations was confirmed. Keeping tabs of short-term and long-term damages in very specialized industries involves a lengthy roster of experts on local industries.

“This is going to be a political disaster when someone finally sits down to figure out a structure for how to pay people but then that structure doesn’t start paying people for two or three years,” O’Neill says.

Notwithstanding the fact that BP is agreeing to this — just how voluntary that agreement might be is left for the reader to ponder — one has to wonder where the legal authority for the fund will come from. The 9/11 fund that Mr. Feinberg oversaw was established by an Act of Congress, for example, and there does not appear to be any independent statutory authority for the President to establish this fund on his own.

Also unanswered is the question of what claims will be covered by the fund:

BP officials are adamant that the company should not be liable for the lost wages of oil workers laid off because of the six-month moratorium that the Obama administration imposed on deepwater offshore drilling after the Deepwater Horizon explosion and fire. But Interior Secretary Ken Salazar and other administration officials repeatedly have cited idled oil workers as among those who could press claims.

It may turn out that some claims will have to be litigated before recovery is possible, especially since the idea that BP should be responsible for a losses like the lost wages of oil workers idled by a government-imposed drilling moratorium, which only seem to be tangentially related to the explosion of the Deepwater Horizon.

In any event, this news is likely to be well-received by Gulf Coast residents who have been harmed by the oil spill. What remains to be seen is how it will be implemented.

Don’t be surprised if you now see Obama and the Democrats ease up a little on the “BP is the devil” bit. The administration needs BP to sign on to its energy agenda — just like it needed Goldman to check-off on fin-reg and AHIP to green light the ACA, and for similar reasons. The fact is that cap-and-trade was BP’s idea (seriously, it was) and that big, entrenched energy companies stand to benefit most from carbon taxes.

Besides, BP and the Democrats have the same publicist! Stan Greenberg’s consultancy Greenberg Quinlan Rosner is the go-to PR outfit for any Democrat who matters, and was a driving force behind the superficial reinvention of British Petroleum as “Beyond Petroleum” in the early part of the decade.

The Texas Board of Education has put together a six-member committee to help develop new curriculum standards for social studies classes and textbooks. It’s not going well.

The board picked, among others, an evangelical minister named Peter Marshall to help shape the standards, as well as Republican activist David Barton, a pseudo-historian and religious right celebrity who gives speeches about the United States being founded as a “Christian nation.”

“Civil rights leaders Cesar Chavez and Thurgood Marshall — whose names appear on schools, libraries, streets and parks across the U.S. — are given too much attention in Texas social studies classes, conservatives advising the state on curriculum standards say.

“To have Cesar Chavez listed next to Ben Franklin” — as in the current standards — “is ludicrous,” wrote evangelical minister Peter Marshall, one of six experts advising the state as it develops new curriculum standards for social studies classes and textbooks. David Barton, president of Aledo-based WallBuilders, said in his review that Chavez, a Hispanic labor leader, “lacks the stature, impact and overall contributions of so many others.”

Marshall also questioned whether Thurgood Marshall, who argued the landmark case that resulted in school desegregation and was the first black U.S. Supreme Court justice, should be presented to Texas students as an important historical figure. He wrote that the late justice is “not a strong enough example” of such a figure.”

This is bound to help Republicans with their outreach to minority communities, right? It’s quite a message to voters in Texas — Vote GOP: the party that thinks civil rights leaders get too much credit.

Barton went on to say the state curriculum should ignore the contributions of Anne Hutchinson, a New England pioneer and early advocate of women’s rights and religious freedom, and argued that Texas social studies books should discuss “republican” values, not “democratic” ones.

It’s unclear how successful the far-right activists will be in shaping the eventual policy, but remember, what happens in Texas doesn’t necessarily stay in Texas. Textbook publishers are reluctant to create different materials for different states, and when one big customer makes specific demands, the frequent result is changes to textbooks nationwide.

“Texas high school students would learn about such significant individuals and milestones of conservative politics as Newt Gingrich and the rise of the Moral Majority — but nothing about liberals — under the first draft of new standards for public school history textbooks. […]

The first draft for proposed standards in United States History Studies Since Reconstruction says students should be expected “to identify significant conservative advocacy organizations and individuals, such as Newt Gingrich, Phyllis Schlafly and the Moral Majority.””

A Democratic state lawmaker said, as it stands, Texas students would get “one-sided, right wing ideology.” He added, “We ought to be focusing on historical significance and historical figures. It’s important that whatever course they take, that it portray a complete view of our history and not a jaded view to suit one’s partisan agenda or one’s partisan philosophy.”

That certainly sounds reasonable, but this is the Texas Board of Education we’re talking about.

Board members — 10 Republicans to 5 Democrats — have recommended downplaying the contributions of civil rights leaders, minimizing an “emphasis on multiculturalism,” and trying to “exonerate” Joe McCarthy.

And let’s also not forget that these indoctrination efforts may have broader implications. As we talked about in July, what happens in Texas doesn’t necessarily stay in Texas. Textbook publishers are reluctant to create different materials for different states, and when one big customer makes specific demands, the frequent result is changes to textbooks nationwide.

Dana Goldstein adds that this reinforces the value in national curriculum standards, an idea pushed by the National Governors’ Association and supported by the Obama administration. “If 46 states can come together around core standards, it means a populous, outlier state like Texas will have less influence over textbook manufacturers,” Dana noted.

As for those deeply concerned about the politicization of America’s classrooms, I’m sure the right-wing critics of the president’s stay-in-school message will be quick to denounce the conservative efforts in Texas. Any minute now.

The first draft of the standards, released at the end of July, is a doozy. It lays out a kind of Human Events version of U.S. history.

Approved textbooks, the standards say, must teach the Texan student to “identify significant conservative advocacy organizations and individuals, such as Newt Gingrich, Phyllis Schlafly, and the Moral Majority.” No analogous liberal figures or groups are required, prompting protests from some legislators and committee members. (Read an excerpt here.)

The standards on Nixon: “describe Richard M. Nixon’s role in the normalization of relations with China and the policy of detente.”

On Reagan: “describe Ronald Reagan’s role in restoring national confidence, such as Reaganomics and Peace with Strength.” (That’s it.)

The Cold War section is rendered as “U.S. responses to Soviet aggression after World War II … ”

The state board of education, made up of 10 Republicans and five Democrats, has to vote on the standards twice in the coming months before they would go into effect.

[…]

Here’s what makes this a national story: what happens in Texas doesn’t stay in Texas, says Diane Ravitch, professor of education at NYU.

That’s because Texas is one of the two states with the largest student enrollments, along with California. “The publishers vie to get their books adopted for them, and the changes that are inserted to please Texas and California are then part of the textbooks made available to every other state,” says Ravitch, who wrote a book about the politics of textbooks.

Rick Hess of the American Enterprise Institute explains it as a simple economic calculation by the big textbook publishers. “Publishers are generally reticent to run two different versions of a textbook,” he says. “You can imagine the headache the expense the logistics, the storage, all of it.”

But don’t start saving for private school tuition just yet. A spokeswoman for the Texas State Board of Education tells TPMmuckraker the board will have to pass the standards first in January, in a “first reading and filing authorization vote,” and then in March in a final vote, before they would go into effect. In an article on the controversy in the Houston Chronicle, one of the conservative leaders on the board actually predicted the standards will pass at least the first vote.

This story reminds us why the new push for national curriculum standards — led by the bipartisan National Governors’ Association and supported by the Obama administration — is so important. Texas, unsurprisingly, is one of just four states choosing not to participate in that project. The others are Alaska, Missouri, and South Carolina. If 46 states can come together around core standards, it means a populous, outlier state like Texas will have less influence over textbook manufacturers. And if this curriculum passes, that will be a very good thing.